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Chapter 14Leadership

Designed & Prepared byB-books, Ltd.

MGMT

Chuck Williams

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What Is Leadership?

After reading these sections, you should be able to:

1. explain what leadership is.

2. describe who leaders are and what effectiveleaders do.

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Leadership

Differencesbetween

Leaders andManagers

Differencesbetween

Leaders andManagers

Substitutesfor

Leadership

Substitutesfor

Leadership

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Leaders versus Managers

MANAGERS

Do things rightStatus quoShort-term

MeansBuilders

Problem solving

MANAGERS

Do things rightStatus quoShort-term

MeansBuilders

Problem solving

LEADERS

Do the right thingChange

Long-termEnds

ArchitectsInspiring & motivating

LEADERS

Do the right thingChange

Long-termEnds

ArchitectsInspiring & motivating

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Leaders versus Managers

American organizations (and probably those in much of the rest of the industrialized world) are under led

and over managed. They do not pay enoughattention to doing the right thing, while theypay too much attention to doing things right.

- Warren Bennis

American organizations (and probably those in much of the rest of the industrialized world) are under led

and over managed. They do not pay enoughattention to doing the right thing, while theypay too much attention to doing things right.

- Warren Bennis

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Substitutes for Leadership

• Leadership substitutes – subordinate, task, or organizational characteristics

that make leaders redundant or unnecessary

• Leadership neutralizers– subordinate, task, or organizational characteristics

that interfere with a leader’s actions

• Leaders don’t always matter– Poor leadership is not the cause of every

organizational crisis

Beyond the Book

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Leadership Substitutes and Neutralizers

Characteristic People-RelatedLeadership Behaviors

Task-RelatedLeadership Behaviors

Subordinate Characteristics Ability, experience, training, knowledge Need for independence Professional orientation Indifference toward organizational rewards

NeutralizeNeutralizeSubstitute, NeutralizeNeutralize

Substitute, NeutralizeNeutralizeSubstitute, NeutralizeNeutralize

Task Characteristics Unambiguous and routine tasks Performance feedback provided by the

work itself Intrinsically satisfying work

No effectNo effect

Substitute, Neutralize

Substitute, NeutralizeSubstitute, Neutralize

Neutralize

Organizational Characteristics Formalization, meaning specific plans,

goals, and areas of responsibility Inflexibility, meaning rigid, unbending rules

and procedures Highly specified staff functions Cohesive work groups Organizational rewards beyond a leader's

control Spatial distance between supervisors and

subordinates

No effect

No effect

No effectSubstitute, NeutralizeNeutralize

Neutralize

Neutralize

Neutralize

NeutralizeSubstitute, NeutralizeNeutralize

Neutralize

Beyond the Book

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Who Leaders Are and What Leaders Do

Leadership Traits

Leadership Traits

LeadershipBehavior

LeadershipBehavior

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Biz Flix: U-571

Take Two Video

Click

Beyond the Book

Are the traits or behaviors depicted in the clip right for this situation? Why or why not?

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Leadership Behaviors

Initiating Structure

The degree to which a leader structures the roles of followers by setting goals, giving directions, setting deadlines, and assigning tasks.

Consideration

The extent to which a leader is friendly, approachable, and supportive and shows concern for employees.

2.22.2

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Blake/Moulton Leadership Grid

1,91,9 Country Club Country Club ManagementManagement

9,9 9,9 Team Team ManagementManagement

1,11,1Impoverished Impoverished ManagementManagement 9,19,1

Authority-Authority-ComplianceCompliance

5,55,5Middle of theMiddle of the

RoadRoad5,55,5

1 2 3 4 5 6 7 8 91

2

3

4

5

6

7

8

9C

on

cern

fo

r P

eop

le

Concern for Production

High

Low

Low High2.22.2

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Situational Approaches to Leadership

After reading these sections, you should be able to:

3. explain Fiedler’s contingency theory.

4. describe how path-goal theory works.

5. explain the normative decision theory.

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Putting Leaders in the Right Situation:Fiedler’s Contingency Theory

GroupPerformance

GroupPerformance =

LeadershipStyle

LeadershipStyle

SituationalFavorableness

SituationalFavorableness

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Putting Leaders in the Right Situation:Fiedler’s Contingency Theory

Least Preferred CoworkerLeast Preferred Coworker

Situational FavorablenessSituational Favorableness

Matching Leadership Stylesto Situations

Matching Leadership Stylesto Situations

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Leadership Style:Least Preferred Coworker

• Leadership style is the way a leader generally behaves toward followers– seen as stable and difficult to change

• Style is measured by the Least Preferred Co-worker scale (LPC)– relationship-oriented– task-oriented

3.13.1

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Leadership Style:Least Preferred Coworker Scale

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Situational Favorableness

Situational Favorableness

The degree to which a particular situation either permits or denies a leader the chance to influence the behavior of group members.

Three factors: Leader-member relations Task structure Position power

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Situational Favorableness

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Matching Leadership Styles to Situations

3.33.3

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WellPoint CEO Adopts New Leadership Style

Source: V. Fuhrmans and C. Hymowitz, “WellPoint’s CEO Takes the Reins, Facing Challenge,” The Wall Street Journal, 6 June 2007, B1.

Beyond the Book

• The new WellPoint CEO Angela Braly had to manage the dismissal of finance chief David Colby, who violated company policy.

•Braly has taken a different approach to messy executive dismissals such as this by being open and up front about what occurred in order to quell rumors.

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Path-Goal TheoryPath-Goal Theory

A leadership theory that states that leaders can increase subordinate satisfaction and performance by clarifying and clearing the paths to goals and by increasing the number and kinds of rewards available for goal attainment.

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Basic Assumptions of Path-Goal Theory

Clarify paths to goalsClarify paths to goals

Clear paths to goals by solving problems and removing roadblocks

Clear paths to goals by solving problems and removing roadblocks

Increase the number and kinds of rewardsavailable for goal attainment

Increase the number and kinds of rewardsavailable for goal attainment

Do things that satisfy followers today or will lead to future rewards or satisfaction

Do things that satisfy followers today or will lead to future rewards or satisfaction

Offer followers something unique and valuablebeyond what they’re experiencing

Offer followers something unique and valuablebeyond what they’re experiencing

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Path-Goal TheorySubordinate Contingencies•Perceived Ability•Locus of Control•Experience

Subordinate Contingencies•Perceived Ability•Locus of Control•Experience

Environmental Contingencies•Task Structure•Formal Authority System•Primary Work Group

Environmental Contingencies•Task Structure•Formal Authority System•Primary Work Group

Outcomes•Subordinate satisfaction•Subordinate performance

Outcomes•Subordinate satisfaction•Subordinate performance

Leadership Styles•Directive•Supportive•Participative•Achievement-Oriented

Leadership Styles•Directive•Supportive•Participative•Achievement-Oriented

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Adapting Leader Behavior:Path-Goal Theory

LeadershipStyles

LeadershipStyles

Subordinateand

EnvironmentalContingencies

Subordinateand

EnvironmentalContingencies

OutcomesOutcomes

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Leadership Styles• Directive

– clarifying expectations and guidelines

• Supportive– being friendly and approachable

• Participative– allowing input on decisions

• Achievement-Oriented– setting challenging goals

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Sue Nokes’ LeadershipStyle Translates into Customer

Satisfaction

• Sue Nokes, in charge of sales and customer service at T-Mobile, is charged with making sure customers are happy with their service.

• She does this by making sure customer service reps at T-Mobile call centers are happy at their jobs. Happy, motivated employees will, in turn, serve customers better.

• Some of her techniques: showing up at local call centers to support employees, listening to employee complaints and wishes, creating freedom for employees to give honest feedback.

Source: J. Reingold, “You Got Served,” Fortune, 1 October 2007, 55-58.

Beyond the Book

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Subordinate and Environmental Contingencies

Perceived ability

Locus of control

Experience

Perceived ability

Locus of control

Experience

Subordinate Environmental

Task structure

Formal authority system

Primary work group

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Path Goal Theory:When to Use Leadership Styles

Directive Leadership Supportive Leadership Unstructured tasks Inexperienced workers Workers with low perceived ability Workers with external locus of

control Unclear formal authority system

Structured, simple, repetitive tasks

Stressful, frustrating tasks When workers lack confidence Clear formal authority system

Participative Leadership Achievement-Oriented Leadership Experienced workers Workers with high perceived ability Workers with internal locus of

control Workers not satisfied with rewards Complex tasks

Unchallenging tasks

Directive Leadership Supportive Leadership Unstructured tasks Inexperienced workers Workers with low perceived ability Workers with external locus of

control Unclear formal authority system

Structured, simple, repetitive tasks

Stressful, frustrating tasks When workers lack confidence Clear formal authority system

Participative Leadership Achievement-Oriented Leadership Experienced workers Workers with high perceived ability Workers with internal locus of

control Workers not satisfied with rewards Complex tasks

Unchallenging tasks

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Adapting Leadership Behavior

WorkerReadiness

WorkerReadiness

LeadershipStyles

LeadershipStyles

Hersey and Blanchard’s Situational Leadership Theory

Beyond the Book

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Worker Readiness

• The ability and willingness to take responsibility for directing one’s behavior at work

• Components of worker readiness:– Job readiness– Psychological readiness

Beyond the Book

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Worker Readiness

R4R4

R3R3

R2 R2

R1R1

confidentwilling able

confidentwilling able

insecurenot willingable

insecurenot willingable

confidentwilling not able

confidentwilling not able

insecure not able not willing

insecure not able not willing

Beyond the Book

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Leadership Styles

Telling(R1)

Telling(R1)

Selling(R2)

Selling(R2)

Participating(R3)

Participating(R3)

Delegating(R4)

Delegating(R4)

high task behaviorlow relationship behavior

high task behaviorlow relationship behavior

high task behaviorhigh relationship behavior

high task behaviorhigh relationship behavior

low task behaviorhigh relationship behavior

low task behaviorhigh relationship behavior

low task behaviorlow relationship behavior

low task behaviorlow relationship behavior

Beyond the Book

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Normative Decision Theory

DecisionStyles

DecisionStyles

Decision Quality and Acceptance

Decision Quality and Acceptance

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Decision Styles

Solve the problem yourself

Solve the problem yourself

Obtain information.Select a solutionyourself.

Obtain information.Select a solutionyourself.

Share problem,get ideas fromindividuals.Select asolution yourself.

Share problem,get ideas fromindividuals.Select asolution yourself.

AI AII CI

Share problemwith group,get ideas.Make decision,which may ormay not reflectinput.

Share problemwith group,get ideas.Make decision,which may ormay not reflectinput.

Share problemwith group.Together tryto reach a solution. Leader acts asfacilitator.

Share problemwith group.Together tryto reach a solution. Leader acts asfacilitator.

CII GII

Leader solves the problemor makes the decision

Leader accepts any decisionsupported by the entire group

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Outside Pressure on GMRestructuring

• Fall 2008 saw the Detroit-based auto industry looking to the U.S. government for a bailout to keep companies like General Motors from declaring bankruptcy.

• Along with a potential $15 billion package, government officials exerted outside pressure on GM to change its leadership, with some calling for the resignation of CEO Rick Wagoner.

• Change in leadership is common during retrenchment, whether pressed from inside or outside. The problem here? Failure of the industry to keep up with consumer preferences and innovate.

Source: J. D. Stoll and G. Hitt, “Outside Pressure Grows for GM to Oust Wagoner,” The Wall Street Journal, 8 December 2008. A16.

Beyond the Book

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Decision Quality and Acceptance

• Using the right amount of employee participation:– improves decision quality – improves acceptance

• Decision tree helps leader identify

optimal level of participation

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Quality RuleQuality Rule If the quality of the decision is important, then don't use an

autocratic decision style.

Leader Information RuleLeader Information Rule If the quality of the decision is important, and if the leader doesn't

have enough information to make the decision on his or her own, then don't use an autocratic decision style.

Subordinate Information RuleSubordinate Information Rule If the quality of the decision is important, and if the subordinates

don't have enough information to make the decision themselves, then don't use a group decision style.

Normative Theory Decision Rulesto Increase Decision Quality

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Normative Theory Decision Rulesto Increase Decision Quality

Goal Congruence RuleGoal Congruence Rule If the quality of the decision is important, and subordinates' goals are

different from the organization's goals, then don't use a group decision style.

Problem Structure RuleProblem Structure Rule If the quality of the decision is important, the leader doesn't have

enough information to make the decision on his or her own, and the problem is unstructured, then don't use an autocratic decision style.

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Normative Theory Decision Rulesto Increase Decision Acceptance

Commitment Probability RuleCommitment Probability Rule If having subordinates accept and commit to the decision is

important, then don't use an autocratic decision style

Subordinate Conflict RuleSubordinate Conflict Rule If having subordinates accept the decision is important and

critical to successful implementation, and if subordinates are likely to disagree or end up in conflict over the decision, then don't use an autocratic or consultative decision style

Commitment Requirement RuleCommitment Requirement Rule If having subordinates accept the decision is absolutely

required for successful implementation, and if subordinates share the organization's goals, then don't use an autocratic or consultative style5.25.2

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Strategic Leadership

After reading this section, you should be able to:

6. explain how visionary leadership (i.e., charismatic and transformational leadership) helps leaders achieve strategic leadership.

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Visionary Leadership

CharismaticLeadership

CharismaticLeadership

TransformationalLeadership

TransformationalLeadership

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Charismatic Leadership

• Creates an exceptionally strong relationship between leader and follower

• Charismatic leaders:– articulate a clear vision based on values– model values consistent with vision– communicate high performance expectations– display confidence in followers’ abilities

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Kinds of Charismatic Leaders• Ethical Charismatics

– provide developmental opportunities– are open to positive and negative feedback– recognize others’ contributions– share information– show concern for the interests of the group

• Unethical Charismatics– control and manipulate followers– do what is best for themselves– only want positive feedback– motivated by self-interest

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Ethical and Unethical Charismatic Leaders

Exercising Power Use power to serve others

Creating the vision Ask followers to help develop the vision

Communicating with followers

Engage in two-way communication

Accepting feedback Are open to feedback

Want followers to think and to question the status quo

Stimulating followers

Developing followers Focus on developing followers

Living by moral standards

Exhibit three virtues: courage, sense of fairness, integrity

Charismatic Leader Charismatic Leader BehaviorsBehaviors

Ethical CharismaticsEthical Charismatics

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Ethical and Unethical Charismatic Leaders

Charismatic Leader Charismatic Leader BehaviorsBehaviors

Unethical CharismaticsUnethical Charismatics

Exercising Power Use power to dominate others

Creating the vision Sole provider of vision

Communicating with followers

Engage in one-way communication, not open to input from others

Accepting feedback Prefer yes-men, punish candid feedback

Don’t want followers to think, prefer uncritical acceptance of own ideas

Stimulating followers

Developing followers Insensitive to followers’ needs

Living by moral standards

Follow standards only if they satisfy immediate self interests

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Reducing Risks of Unethical Charismatics

1. Have a clearly written code of conduct

2. Recruit, select, and promote managers with high ethical standards

3. Train leaders how to value, seek, and used diverse points of view

4. Celebrate and reward those who exhibit ethical behaviors

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Transformational Leadership

• Generates awareness and acceptance of group’s purpose and mission

• Gets followers to accomplish more than they intended or thought possible

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Components of Transformational Leadership

1. Charisma or idealized influence

2. Inspirational motivation

3. Intellectual stimulation

4. Individualized consideration

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The Mindset of a Growth Leader

• Growth leaders are people within a company who generate organic growth and create value for customers, sometimes in spite of formal company leadership.

• Growth leaders tend to view life as a journey. They not only embrace change but seek opportunities for it.

• They tend to see customers as people, manage risk by taking action, and place small bets quickly.

Source: S. D. Carr, J. M. Liedtka, R. Rosen, and R. E. Wiltbank, “In Search of Growth Leaders,” The Wall Street Journal, 7 July 2008, R4.

Beyond the Book